scholarly journals Liquidity Risk Management: A Comparative Study between Conventional and Islamic Banks in Bangladesh

2016 ◽  
Vol 10 (2) ◽  
pp. 18-35 ◽  
Author(s):  
Md Lutfor Rahman ◽  
SM Hasanul Banna
Keyword(s):  
Risk Management ◽  
Liquidity Risk ◽  
Equity Capital ◽  
Capital Adequacy ◽  
Annual Reports ◽  
Islamic Banks ◽  
Working Capital ◽  
Return On Assets ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

Liquidity risk may arise from diverse operations of financial intermediaries, facilitators and supporters as they are fully liable to make available liquidity when required by the third party. Incase of Islamic Banks additional efforts are required for scaling liquidity management due to their unique characteristics and conformity with Shariah principles. The objective of this study is to look into the liquidity risk associated with the solvency of the financial institutions, with a purpose to evaluate liquidity risk management (LRM) through a comparative analysis between conventional and Islamic banks of Bangladesh. This paper investigates the significance of Size of the Firm, Net Working Capital, Return on Equity, Capital Adequacy and Return on Assets (ROA), on Liquidity Risk Management in conventional and Islamic banks in Bangladesh. The study has taken six mid-size banks- three conventional and three Islamic banks as samples. It is based on secondary data which are collected from the selected banks’ annual reports, covering a period of 2007-2011. Independent variables that have positive but insignificant relation are; size of the bank and net working capital to liquidity risk in Islamic banks and in case of conventional banks size of bank is negatively related with the liquidity risk. Only return on assets is positively affecting the liquidity risk at 10% level in case of conventional banks, but in Islamic banks the relationship is insignificant. The other variables are found to be insignificant in affecting the liquidity risk for both the conventional and Islamic banks in BangladeshJournal of Business and Technology (Dhaka) Vol.10(2) 2015; 18-35

scholarly journals How Efficient is the Islamic Banking Model in Pakistan?

2017 ◽  
Vol 6 (1) ◽  
pp. 111-125
Author(s):  
Tahseen Mohsan Khan ◽  
Mohsan Khan Rizwan ◽  
Saima Akhtar ◽  
Syed Waqar Azeem Naqvi
Keyword(s):  
Credit Risk ◽  
Asset Management ◽  
Capital Adequacy ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Management Capability ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

The purpose of this study is to analyze the conventional and Islamic banking in Pakistan. For this study, a sample of 19 conventional banks and five Islamic banks was selected. The CAMEL approach is used to evaluate the performance of both conventional and Islamic banks. Ten ratios were used to measure profitability, liquidity and credit risk. Our findings suggest that Islamic banks are less efficient than conventional banks in asset management, management capability and liquidity. Conventional banks have better earning capability in terms of return on assets and overhead ratios. The analysis also shows that Islamic banks have better capital adequacy than conventional banks.

scholarly journals Analysis of the determinants of bank liquidity risk: The case of Islamic banks in the UAE

2021 ◽  
Vol 119 ◽  
pp. 01008
Author(s):  
Khadija Ichrak Addou ◽  
Afaf Bensghir
Keyword(s):  
Liquidity Risk ◽  
Multiple Linear Regression Model ◽  
Capital Adequacy ◽  
Annual Data ◽  
Islamic Banks ◽  
Mena Region ◽  
Return On Assets ◽  
Return On Equity ◽  
Risk Determinants ◽  
The Impact

This article aims to examine the principal parameters that impact the liquidity risk incurred by Islamic banks in the UAE. The study examines annual data from four Islamic banks in the UAE. The Data is extracted from their annual activity reports and financial results. A multiple linear regression model is used to assess the impact of six bank-specific variables (Return on Equity, return on assets, size of the bank, liquidity gaps, non-performing loans and capital adequacy ratio) on the liquidity risk of UAE Islamic banks. The designed model shows that ROA and NPL negatively impact the liquidity risk of the studied banks, while the other determinants, namely size, ROE, liquidity gaps and CAR contribute to the improvement of liquidity of UAE banks. Thus, our empirical results complement the existing studies related to the analysis of liquidity risk determinants incurred by Islamic banks operating in the MENA region, especially Emirati banks.

Financial Risk of Conventional and Islamic Banks: Does Institutional Quality Matter?

2021 ◽  
Vol 12 (3) ◽  
pp. 510-524
Author(s):  
Normaizatul Akma Saidi Et.al
Keyword(s):  
Credit Risk ◽  
Financial Risk ◽  
Liquidity Risk ◽  
Islamic Banks ◽  
Government Effectiveness ◽  
Regulatory Quality ◽  
Level Data ◽  
Conventional Banks ◽  
The Relationship ◽  
Conventional And Islamic Banks

Banks play a significant role in financing the economy and take on risky financial activities based on information and trust as they specialized companies with their own specificities. This study was propelled to unravel the determinants that affect financial risk (liquidity risk and credit risk) for conventional and Islamic banks. The bank-level data of conventional and Islamic banks in the regions of Middle East, Southeast Asia, and South Asia between 2006 and 2014 were collected from the Bankscope, which is a commercial database produced by the Bureau van Dijk. Thus, for conventional banks the obtained results exhibited significantly positive relationship between regulatory quality towards liquidity risk. Then, the relationship between regulatory quality towards credit risk was negatively significant for conventional banks. Meanwhile, as for Islamic banks, the relationship between government effectiveness and regulatory quality towards financial risk was insignificant. Hence, the regulators or policymakers are able to identify specific mechanism to improve the risk management of these banks as well through this study.

The Use Of CAMELS In Detecting Financial Distress Of Islamic Banks In Malaysia

2014 ◽  
Vol 30 (2) ◽  
pp. 445 ◽  
Author(s):  
Rashidah Abdul Rahman ◽  
Mazni Yanti Masngut
Keyword(s):  
Neural Network ◽  
Quality Management ◽  
Financial Distress ◽  
Capital Adequacy ◽  
Advisory Council ◽  
Annual Reports ◽  
Islamic Banks ◽  
Return On Assets ◽  
Management Quality ◽  
Asset Quality

The current study uses CAMEL (Capital Adequacy, Asset Quality, Management Quality, Earnings Efficiency, and Liquidity) ratings system, with the addition of Shariah Compliance Ratio (CAMELS) in order to detect the financial distress of Islamic banks in Malaysia. Using neural network, the study analyses data collected from the 17 Islamic banks annual reports for the period 2006 to 2010. It was found that all Islamic banks have higher ETA ratios which portray a good performance of capital adequacy and are less likely to face financial distress. As for asset quality, all Islamic banks did not have the possibility to face financial distress as they are able to handle their non-performing loans throughout the years. Meanwhile for management quality, all Islamic banks show lower ratios in paying salaries to their employee. Earning efficiency for all Islamic banks show better performance and will be less likely to face financial distress in terms of return on assets but not for return of equity. Liquidity indicates that the Islamic banks have a large number of loans but they have sufficient liquid assets in order to cover their liabilities and commitments. Lastly for Shariah Compliance, Islamic banks have complied with all rules and regulations that have been regulated by Bank Negara Malaysias Shariah Advisory Council.

scholarly journals PERBANDINGAN TINGKAT PROFITABILITAS DAN LIKUIDITAS DARI ASSET-LIABILITIES MANAGEMENT PADA BANK SYARIAH DAN BANK KONVENSIONAL

2016 ◽  
Vol 5 (1) ◽  
pp. 1
Author(s):  
Rindang Nuri Isnaini Nugrohowati
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Capital Adequacy ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Liability Management ◽  
Capital Adequacy Ratio ◽  
Conventional Banks ◽  
Important Position

Abstract The banking sector has a very important position for the economic systemof a country. The banking system, which is part of the financial system willaffect the course of the economic system as a whole. If the banking system isweak then the system will also be weak economy. Banking is an intermediaryinstitution is the institution that channel funds from surplus funds (surplusunits) to the sectors that lack of funds (defi cit units). With the banking economic actors in need of funds can be met so that the economy can continue to run. In this study will specifi cally analyze the comparison of the level of profi tability of the asset-liability management in Islamic banks and conventional banks are seen from the return on assets and return on equity rises. It also will be studied comparative level of liquidity in Islamic banks and conventional banks are seen from the loan to deposit ratio and Capital Adequacy Ratio. By Hyphothesis is as follows : Ha1: there are differences in the level of profitability of the asset-liabilitymanagement in Islamic banks and conventional banks are seen from the return on assets and return on equity Ha2: there are differences in the level of liquidity in Islamic banks andconventional banks are seen from the loan to deposit ratio and Capital Adequacy Ratio Data analysis has been done obtained the following conclusions, based onmeans testing compare with test Independent-Samples t-test showed that the level of tability seen from ROA and ROE between Islamic Bank and Bank Konvensiona show any signifi cant difference. This is demonstrated by tests of signifi cance 0.02 0.05 for FDR, while for the signifi cance test CAR of 0.38> 0.05. Keyword: Profi tabilitas, Likuiditas, Asset Liabilities Management, Bank Syariah

scholarly journals Islamic Versus Conventional Banks in Lebanon: An Empirical Study of Credit Risk Management

2018 ◽  
Vol 10 (8) ◽  
pp. 53
Author(s):  
Boutheina Hachem ◽  
Hiyam Sujud
Keyword(s):  
Risk Management ◽  
Empirical Study ◽  
Credit Risk ◽  
Risk Mitigation ◽  
Islamic Banks ◽  
Credit Risk Management ◽  
Credit Management ◽  
Management Processes ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

The aim of this research is to compare conventional and Islamic banks in various aspects of credit risk management processes. The study used 200 questionnaires, collected from 21 traditional banks and 4 Islamic banks in Lebanon. The results found that differences in the various issues of credit management between Islamic and conventional banks. Islamic banks are more understanding, aware, and cautious in their approach than traditional banks. Islamic banks are more efficient in assessing and analyzing credit risk than conventional banks. Lastly, Islamic banks are more used to credit risk mitigation than traditional banks.

scholarly journals Impact of COVID-19 on the Performance and Stability of Conventional and Islamic Banks in the GCC Region, Malaysia, and Pakistan

2021 ◽  
Vol 8 (1) ◽  
pp. 25-37
Author(s):  
Qazi Yasir Arafat ◽  
Abdul Rashid ◽  
Qazi Waseem Jan
Keyword(s):  
Negative Impact ◽  
Islamic Banks ◽  
Return On Assets ◽  
Return On Equity ◽  
Quarterly Data ◽  
Z Scores ◽  
Conventional Banks ◽  
The Stability ◽  
The Impact ◽  
Conventional And Islamic Banks

This study examines the impact of COVID-19 on the performance and stability of conventional and Islamic banks. The sample included all the 21 listed Islamic banks (IBs) and 44 listed conventional banks (CBs) from the GCC region, Malaysia, and Pakistan. Quarterly data of these banks covering the period January 2019 to June 2020 were obtained from their quarterly reports. Performance was measured by return on assets (ROA) and return on equity (ROE), while stability was measured by the Z-scores of these banks. Based on the previous literature, a better performance of IBs was expected because these banks are based on the participatory mode of financing instead of debt-based financing. However, the results of the current study showed a significant and negative impact of COVID-19 on the financial performance of both types of banks, suggesting that either type of banking was significantly affected during the pandemic. However, we did not find any significant evidence of the impact of COVID-19 on the stability of these banks.

Factors Influencing the Margins of Islamic Banks

2018 ◽  
Vol 19 (4) ◽  
pp. 1026-1036
Author(s):  
Nurhafiza Abdul Kader Malim ◽  
M.K. Normalini
Keyword(s):  
Global Financial Crisis ◽  
Positive Impact ◽  
Liquidity Risk ◽  
Institutional Development ◽  
Capital Adequacy ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Factors Influencing ◽  
Conventional Banks ◽  
The Global Financial Crisis

This article investigates the factors influencing the margins of Islamic banks in 15 countries for the period 2007–2013. The article also analyses the effect of the global financial crisis (2007–2009) on the Islamic banks’ margins. Despite the rapid growth of Islamic banking, the margins of Islamic banks remain higher than conventional banks. The margins reflect the costs of financial intermediation, as higher margins may discourage clients from using bank services. The findings reveal that the margins of Islamic banks are affected mainly by capital adequacy, overhead costs, liquidity risk, bank size and institutional development. Interestingly, the crisis has a positive impact on Islamic banks’ margins. These findings will be useful for the design of policies in narrowing the margins.

scholarly journals Risk management practices in Egypt: A comparison study between Islamic and Conventional banks

2015 ◽  
Vol 5 (4) ◽  
pp. 257-270 ◽  
Author(s):  
Hassan M. Hafez
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Management Practices ◽  
Liquidity Risk ◽  
Risk Identification ◽  
Islamic Banks ◽  
Comparison Study ◽  
Risk Monitoring ◽  
Conventional Banks ◽  
Risk Assessment And Analysis

The purpose of this research is to examine the degree to which the Egyptian banks use risk management practices and techniques to eliminate associated risks to their business. Not only has that but also to compare between Islamic and conventional banked in terms of risk management practices. A standardized questionnaire was used to cover the main aspects of risk management: understanding risk, risk management, risk identification, risk assessment and analysis; risk monitoring and risk management practices and finally the types of risks faced by the two set of banks. The study found that the most challenging types of risks facing Islamic and conventional banks in Egypt are credit and liquidity risks. Conventional banks are more efficient in risk management and use more sophisticated techniques and practices. Liquidity risk is the most prominent and vital risk for Islamic Banks.

scholarly journals Risiko, Efisiensi dan Kinerja pada Bank Konvensional di Indonesia

2017 ◽  
pp. 111
Author(s):  
Sutrisno Sutrisno
Keyword(s):  
Credit Risk ◽  
Stock Exchange ◽  
Liquidity Risk ◽  
Capital Adequacy ◽  
Negative Effects ◽  
Return On Assets ◽  
Operating Income ◽  
Net Interest Margin ◽  
Capital Adequacy Ratio ◽  
Conventional Banks

The purpose of this study is to examine the effect of risk, efficiency and performances of conventional banks in Indonesia. Risk variables consist of capital risk which are measured by Capital Adequacy Ratio (CAR), liquidity risk which are measured by Loan to Deposit Ratio (LDR), credit risk which are measured by Non Performing Loan (NPL) and management risk which are measured by Net Interest Margin (NIM). Efficiency is measured by Operating Expense to Operating Income (BOPO) while banking performances are measured by Return on Assets (ROA). The population of this study is all of conventional banks registered in Indonesia Stock Exchange(BEI.) Purposive sampling method is used and the number of samples is 16 banks. We use quarterly data during period of 2013-2014. The hypotheses are tested using multiple linear regression.The result shows that capital risk (CAR) has negative effects, Liquidity risk (LDR) has positive and significant effects, credit risk (NPL) has no significant effects and management risk (NIM) has positive and significant effects on banking performance. Meanwhile, efficiency (BOPO) has significant and negative effects on banking performance.  

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